("TMH" or "the Group")

• Excellent progress was made towards bringing the mhi-500, the Group’s needle-free insulin delivery product, to market

• In December 2001, the Group was awarded a CE mark on the mhi-500, less than 8 months after signing an agreement with Bioject

• Sales of the mhi-500 commenced in January 2002; high levels of interest have been shown by patients and diabetic clinics

• It is anticipated that the mhi-600 will be available for sale in the fourth quarter of this year

• The Group delivered a pleasing trading performance from Eurocut, its orthopaedic instruments business; a favourable product mix improved margins and operating profit increased by 53% to £524,000 on turnover up 33% to £2,760,000

• Planning permission has been received to extend the Eurocut factory, to be completed by the end of the year, increasing the production facilities available to the Group by an estimated 60%

• Trials for the Hyperlyser are ongoing; as previously stated, it is not expected to generate any substantial income before the year ending 30 June 2003

• Group operating loss was £32,000, an improvement on last year and in line with Directors’ expectations

Ian Townsend, Chief Executive commented: "As a Group we remain committed to developing and expanding our portfolio of medical devices. With Eurocut performing well and initial demand for the needle-free system encouraging, the result for the full year should show a continued improvement."

4 March 2002

("TMH" or "the Group")

I am pleased to report on a period of strong progress by the Group, in which Eurocut, the Group's orthopaedic instruments business, returned a very pleasing trading performance and we made excellent progress towards bringing the mhi-500, our needle-free insulin delivery product, to market.

The Group delivered an operating loss for the period of £32,000, an improvement on the same period last year and in line with Directors’ expectations. The loss on ordinary activities before taxation improved to £78,000 (2000: £109,000). During December the Group successfully raised £1,306,000 from a placing of new shares which reduced our net debt position to £781,000 at the end of December 2001. The funds will be used to continue the development of the Group in line with our business plan.

As anticipated at the time of our preliminary results in September, Eurocut performed very strongly during the first half of the year, achieving record results. Turnover was £2,760,000, up by 33% on the same period last year. Product mix contributed to an improvement in margin and operating profit increased by 53% to £524,000 (2000: £342,000).

While it would not be prudent to expect this level and mix of activity to be sustained throughout the rest of the year, the order book remains healthy, sales have continued at a high level during the early months of the second half and we expect Eurocut to return an excellent result for the full year.

Planning permission has now been received to extend the Eurocut factory, which will increase the production facilities available to the Group by an estimated 60%. Construction of this extension to the Newhall Road site should begin in April 2002 and is expected to be completed by the end of the year. As tenants of the building the cost to the Group will involve fitting out costs only.

A CE mark was granted on the mhi-500 in December 2001, less than 8 months after signing an agreement with Bioject. This is an impressive feat, and emphasises the quality of facilities available within the Group and the outstanding contribution of all our staff. We now have a team of specialist nurses as well as experienced medical sales personnel visiting diabetic clinics and patients throughout the UK. The level of interest shown has been very high and sales commenced in January. We are in the process of applying to the NHS to have our system added to the Drug Tariff and made available on prescription to all diabetics in this country, but at this stage we have received no indication of intention from the NHS.

In addition, we are continuing to progress the development of the mhi-600. It is anticipated that with the benefits of our design and prototyping facilities and our in-house regulatory affairs specialist, the mhi-600 will be available for sale in the fourth quarter of this year.

In January this year, TMH was awarded a grant of £563,863 from the "Invest for Growth" scheme of investment, administered by Business Link South Yorkshire. The proceeds of the grant are being used to further extend the Group's range of needle-free injection systems for diabetics.

We continue to progress the Hyperlyser, a diagnostic device to detect helicobacter pylori which causes stomach ulcers and other stomach complaints, though at a slower rate than the mhi-500. Trials for the Hyperlyser are ongoing and, as we have previously stated, it is not expected to generate any substantial income before the year ending 30 June 2003.

As a Group we remain committed to developing and expanding our portfolio of medical devices. With Eurocut performing well and initial demand for the needle-free system encouraging, the result for the full year should show a continued improvement.

Six months Six months Year

ended 31 ended 31 ended 30

December 2001 December 2000 June 2001

£’000 £’000 £’000

TURNOVER 2,820 2,188 4,506

Cost of sales (1,618) (1,371) (2,570)

Gross profit 1,202 817 1,936

Operating expenses (1,234) (891) (2,089)

Operating loss (32) (74) (153)

Net interest payable (46) (35) (93)

Loss on ordinary activities before taxation (78) (109) (246)

Tax on ordinary activities (46) - 10

Retained loss for the period (124) (109) (236)

Loss per ordinary share - basic (0.24)p (0.23)p (0.48)p

31 31 30

December 2001 December 2000 June 2001

£’000 £’000 £’000

Intangible assets 1,880 1,532 1,637

Tangible assets 2,830 2,752 2,781

4,710 4,284 4,418

Stock and work in progress 1,188 666 703

Debtors 1,095 749 1,083

Cash at bank and in hand 1,095 1,441 747

3,378 2,856 2,533

CREDITORS: amounts falling

due within one year (2,919) (3,042) (3,035)

ASSETS/(LIABILITIES) 459 (186) (502)

CURRENT LIABILITIES 5,169 4,098 3,916

CREDITORS: amounts falling due

after more than one year (443) (620) (566)

Deferred taxation (442) - -

Net assets 4,284 3,478 3,350

Called up share capital 532 504 504

Share premium account 3,846 2,420 2,420

Other reserves 487 488 487

Profit and loss account (581) 66 (61)

EQUITY SHAREHOLDERS’ FUNDS 4,284 3,478 3,350

Six months Six months Year

ended 31 ended 31 ended 30

December 2001 December 2000 June 2001

£’000 £’000 £’000

Net cash inflow/(outflow) from

continuing operating activities 82 (182) (49)

Net cash outflow from returns on

investment and servicing of finance (45) (34) (93)

Taxation - 15 (52)

Capital expenditure and financial investment (1,121) (280) (1,101)

Equity dividends paid - (10) (10)

Net cash outflow before financing (1,084) (491) (1,305)

Financing 1,247 2,184 1,908

Increase in cash in the period 163 1,693 603

Operating loss (32) (74) (153)

Depreciation on tangible fixed assets 185 145 321

Amortisation of goodwill 5 5 10

Loss on sale of fixed assets - 14 14

Increase in stocks (485) (116) (153)

Increase in debtors (11) (26) (361)

Increase/(decrease) in creditors 420 (130) 273

Net cash inflow/(outflow) from operating activities 82 (182) (49)

Increase in cash for the period 163 1,693 603

Cash outlow from decrease in debt 225 219 496

New hire purchase agreements (60) (340) (571)

Movement in net debt in the period 328 1,572 528

Net debt at 1 July 2001 (1,109) (1,637) (1,637)

Net debt at 31 December 2001 (781) (65) (1,109)

Notes:

1. The financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The information for the year ended 30 June 2001 has been extracted from the statutory accounts of The Medical House PLC which carried an unqualified audit report and have been delivered to the Registrar of Companies.
2. Taxation has been provided at the estimated effective rate for the period. Full provision has been made for Deferred Taxation in accordance with FRS 19, "Deferred Taxation". £396,000 has been treated as a prior year adjustment following the change in accounting policy and £46,000 has been taken to the profit and loss account in the six months ended 31 December 2001.
3. The calculation of earnings per share is based on the loss after taxation and the weighted average number of ordinary shares in issue during the period (six months ended 31 December 2001: 50,903,459 shares, six months ended 31 December 2000: 47,993,999 shares and the year ended 30 June 2001: 49,199,312 shares).
4. Copies of this report have been sent to shareholders and are available to the public at the Company’s office.